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Questions and Answers
What are strategic control and reward systems?
What are strategic control and reward systems?
- An external competition measure
- Internal governance mechanisms to align the incentives of principals to agents (correct)
- A style of leadership
- A method for increasing employee satisfaction
What is organizational culture?
What is organizational culture?
A strong motivator and control system with norms that influence overall productivity.
What are input controls?
What are input controls?
Mechanisms that define and direct employee behavior through rules and procedures.
What are types of input controls?
What are types of input controls?
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What do output controls seek to do?
What do output controls seek to do?
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What are traits of output controls?
What are traits of output controls?
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Study Notes
Strategic Control and Reward Systems
- Essential component in achieving competitive advantage through organizational design.
- Functions as an internal governance mechanism aligning the interests of principals (owners) and agents (employees).
Organizational Culture
- Acts as a powerful motivator and control system within an organization.
- Strong norms are crucial, influencing overall group productivity through peer control.
- Values and norms offer frameworks for managing unpredictable situations.
Input Controls
- Designed as mechanisms within the strategic control and reward system.
- Aim to define and guide employee behavior using explicit, codified rules and standard operating procedures.
- Considered necessary before engaging in value-creating activities to ensure alignment and predictability.
Types of Input Controls
- Establish pathways to achieve goals and outcomes consistently.
- Include budgeting processes, standard operating procedures, and organizational policies to streamline operations.
Output Controls
- Focus on guiding employee behavior by outlining expected results without specifying how to achieve them.
- Encourage flexibility and creativity in problem-solving, allowing for varied approaches to meet objectives.
Traits of Output Controls
- More effective in contexts where performance is closely linked to effort put in by employees.
- Best utilized in organizations concentrating on a single business model or those employing unrelated diversification, where collaboration is minimized.
- Foster an environment that emphasizes work output, potentially diminishing intrinsic motivation among employees.
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